Correlation Between SAN MIGUEL and SIERRA METALS

Can any of the company-specific risk be diversified away by investing in both SAN MIGUEL and SIERRA METALS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SAN MIGUEL and SIERRA METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SAN MIGUEL BREWERY and SIERRA METALS, you can compare the effects of market volatilities on SAN MIGUEL and SIERRA METALS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SAN MIGUEL with a short position of SIERRA METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAN MIGUEL and SIERRA METALS.

Diversification Opportunities for SAN MIGUEL and SIERRA METALS

-0.14

Correlation Coefficient

SAN MIGUEL  SIERRA METALS

Good diversification

The 3 months correlation between SAN and SIERRA is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding SAN MIGUEL BREWERY and SIERRA METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIERRA METALS and SAN MIGUEL is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SAN MIGUEL BREWERY are associated (or correlated) with SIERRA METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIERRA METALS has no effect on the direction of SAN MIGUEL i.e., SAN MIGUEL and SIERRA METALS go up and down completely randomly.

Pair Corralation between SAN MIGUEL and SIERRA METALS

Assuming the 90 days trading horizon SAN MIGUEL BREWERY is expected to generate 1.49 times more return on investment than SIERRA METALS. However, SAN MIGUEL is 1.49 times more volatile than SIERRA METALS. It trades about 0.0 of its potential returns per unit of risk. SIERRA METALS is currently generating about -0.02 per unit of risk. If you would invest  10.00  in SAN MIGUEL BREWERY on December 22, 2024 and sell it today you would lose (0.50) from holding SAN MIGUEL BREWERY or give up 5.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SAN MIGUEL BREWERY  vs.  SIERRA METALS

SAN MIGUEL BREWERY

Risk-Adjusted Performance

Very Weak

Over the last 90 days SAN MIGUEL BREWERY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SAN MIGUEL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

SIERRA METALS

Risk-Adjusted Performance

Very Weak

Over the last 90 days SIERRA METALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SIERRA METALS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SAN MIGUEL and SIERRA METALS

The main advantage of trading using opposite SAN MIGUEL and SIERRA METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAN MIGUEL position performs unexpectedly, SIERRA METALS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SIERRA METALS will offset losses from the drop in SIERRA METALS's long position.

The idea behind SAN MIGUEL BREWERY and SIERRA METALS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.